| A | B |
|---|
| scarcity | a condition in which human wants are unlimited yet supplies of a resource, good, or service are limited |
| trade off | a choice that must be made due to the conditions created by scarcity |
| opportunity cost | the cost of the choice that is NOT chosen |
| diminishing returns | a condition in which the benefits of producing or consuming a product begin to decline |
| market price | the level of prices at which supply of a product equals demand for a product |
| supply | the amount of a product that producers are willing to offer for sale |
| demand | the amount of a product that consumers are willing to buy |
| determinants of demand | factors that alter the demand for a product |
| price floor | a "price support" given to a product to prevent its prices from falling below a certain level |
| price ceiling | a "price cap" that is put on a product to prevent its price from rising above a certain level |
| elasticity | the "changeability" of demand |
| inflation | a general increase in price levels |
| deflation | a general decrease in price levels |
| labor | the workers that are used to produce products |
| capital | the money, machines, or tools that are used to produce products |
| enterpreneurship | the management and ideas that are used to produce products |
| resources | the natural materials of the earth that are used to produce products |
| division of labor | a system in which each laborer is given responsibility for a distinct step in the production process |
| specialization | to focus the attention of labor on those tasks for which it is best suited |
| perfect competition | a system in which producers and consumers enter and leave the market freely, with prices based solely on supply and demand |
| imperfect competition | a system that restricts entry into the market, in which producers (or consumers) have some degree of control over prices |
| sole proprietorship | a business owned by an individual |
| partnership | a business owned by two or more people |
| corporation | a business which is owned and run by shareholders |
| monopoly | type of imperfect competition in which there is one producer in the market that has total control over supply and price |
| oligopoly | type of imperfect competition in which a few large firms are the only suppliers of a similar product. |
| producer | people who produce goods and services |
| consumer | people who buy goods and services |
